Minimum wage = negative impact

Posted Wednesday, March 4, 2009, at 6:12 PM

In my opinion the change in minimum wage couldn't happen at a worse time. In a few months the federal minimum wage will be increased to $7.25 per hour, which could cause a severely negative impact on the already deteriorating economy.

I'm all for paying people a more reasonable amount for their work but I'm afraid the current economic situation plus the consequences of an increased minimum wage will equal bad news.

The concept of an increased minimum wage is very noble and the action is deserved, people certainly deserve to be paid what they are worth. However with employers being required to pay their employees more they will be faced with a challenge of finding a way to get that money. The most common approach would seem to be an increase in cost of the service provided. Another option is to pay others less or the growing popularity of the lay-off.

We are currently living in an economy where businesses and banks are closing and thousands of people are loosing their jobs each day. In all fairness, the last thing a business needs is to pay its employees more money.

At this point an increase in minimum wage will not stimulate the economy, if businesses begin charging more for their good or services, then everything will equal out and the increase will be for naught. The market always equals out. The increase in the cost of goods and services will cause every person in the country to feel the effects.

If businesses choose to go down the other path of laying off employees, then we are faced with an unemployment line that is growing exponentially. This too would not be a good solution.

I did just well enough to pass my economics class in college, as I said before, I am not opposed to an increase in minimum wage, I just think that it would have less of a negative impact if it was postponed until the economy bounces back.

There are ways to deal with the minimum wage increase without layoffs. The company I work for cut all full-time employees' hours to 38 a week for a specific period of time -- sort of a stop-gap measure. A business can also downsize by attrition -- not fill the positions of some who have quit. But that requires spreading the duties among those who remain. Raising prices might be the best choice, depending on what the product or service is, how much demand there is for it, and how much competition is out there.

It's frustrating, isn't it? For every action there is an equal and opposite reaction. Fix one thing and something else goes wrong.